Graham Allen, Managing Director at Commercial Money Matters explains the events at the Supporting Business for Growth Conference 2013.
Attending the conference I was soon scribbling away because the input from a select panel of people grappling with the UK's SME funding drought was so interesting.
Chaired by David Frost, a former Director General of the CBI, the Bank of England's Paul Fisher was invited to open the day with an update on the Funding for Lending (FLS) scheme, which is about to enter its second phase.
The scheme was set up following a 0.6 per cent hike in commercial lending rates in the third quarter of 2012 and according to the Bank's director of markets expectations are high, as a downturn in lending is expected this year.
Apparently, lending should bottom out in 2013 as three main banks (presumably Lloyds, RBS and Barclays) will have offloaded most of their impaired assets by Christmas.
In the meantime, banks that miss their lending targets will be pensalised with higher FFL rates and face new disclosure requirements aimed at shedding light on why they are not lending to business.
So the FLS, which has lent around £16.5 billion since launch, is poised to act as a back-stop for commercial lending as we make our way through the remainder 2013, and will be extended to include asset finance, leasing and specialist lenders - all to be SME weighted.
Forty lenders have signed up to the scheme (thankfully now including asset lenders) which is all well and good, but Mr Fisher is still looking for wider choices for businesses across the UK's six leading banks.
He also warned that failure to extend the scheme heightened the danger of a shock to the financial system because a downturn in lending is expected this year; that the euro crisis is not considered to have ended and that the problems at the Co-op Bank are "unhelpful".
Next with conference input was Aldermore's Phillip Monks who lamented the 25 per cent net fall in business borrowing since 2009 and is braced for a £84 billion shortfall in commercial finance between now and 2016.
In his view, banks are "awash" with liquidity but using it to shore up their balance sheets and he urged regulators to improve competition by easing capital requirements for "challenger" banks.
With an acceptable Tier One Capital buffer now 10 per cent, Mr Monks wants to see the introduction of different floors tailored to a lender's size.
Another speaker of particular interest was Paul Croucher of UK Export Finance who brought us up to speed on the Letter of Credit Guarantee Scheme.
The scheme aims to support 1,000 SMEs by the end of 2013 by providing a guarantee of between 50 per cent and 90 per cent of value on letters of credit, where a UK bank doesn’t have risk appetite on the foreign issuing bank.
On to Lord Young, the Prime Minister's enterprise adviser, who declared that we are in the "greatest revolutionary period in history" because of advances in technology.
He also confirmed that the UK is currently home to around 4.8 million SMEs, 400,000 of which showed growth in 2012.
Lord Young wants to see SMEs in the procurement process and to facilitate this, PQQs on quotes and tenders under £200,000 are to be abandoned and universal terms introduced for large and small suppliers.
According to the Peer, the Business Bank will be providing insurance bonds for SME at some point in the future.
Lord Young then gave an update on a new scheme involving 138 business schools which, at the start of the 2013/14 academic year, will provide a voucher system aimed at encouraging firms to take on trainees.
The CBI's director of corporate markets, Matthew Fell, then took the floor and didn't mince his words when advising his audience to get used to the "new normal" for commercial lending i.e. onerous terms and conditions and various detriments resulting from heavy redundancies amongst banking relationship managers.
He made an appeal for more support for medium-sized firms (£10 million to £100 million turnover). While they make up less than 1 per cent of UK of businesses, they provide 20 per cent of economic output and 16 per cent of employment.
Mr Fell moved on to e-commerce in the UK, pointing out that it is second-largest market in the world behind the US. The UK has 300,000 e-commerce only businesses (37 per cent of which are in the Midlands) and the sector is expected to create 1.5 million jobs in the UK by 2015.
Finally, Toby Perkins, Shadow Minister for Small Businesses, gave a run down on what to expect if Labour gets into power as follows: the return of the small business task force; encouragement of mutuals that lend to local firms along the lines of Germany's "Spar Cassen" savings banks; a review of the R&D tax credit system; an NVQ in employability; a re-vamp of apprenticeships and a review of pre-pack administration.
Coming away from the conference I was convinced that the speakers are passionately engaged with easing lending conditions for the UK's SMEs but I was left with a nagging doubt about how successful they could be when there doesn't appear to be any new money in the tin.
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